It was confirmed that the registration for the paid-in capital increase being carried out to build a smelter in Tennessee in the United States by Korea Zinc was completed by the court without issue. The 10% Korea Zinc equity in the joint venture, which is highly likely to be used as friendly shares on the side of Chair Choi Yoon-beom of Korea Zinc, is set to wield influence at Korea Zinc's shareholders meeting in March.
According to the court's online registry on the 2nd, the paid-in capital increase resolved by Korea Zinc's board of directors on the 15th of last month was registered on the 29th of last month. The total number of shares issued is 20,872,969, and the amount is 115.5152 billion won.
On the 15th of last month, Korea Zinc held an extraordinary board meeting and decided to invest $7.432 billion (about 10.9 trillion won) to build an integrated nonferrous metal smelter in Clarksville, Tennessee. It decided to establish the joint venture "Crucible JV" with the U.S. government and transfer 10% Korea Zinc equity through a third-party allotment paid-in capital increase.
MBK Partners and Young Poong, which are in a management control dispute with Korea Zinc, immediately filed for an injunction to prohibit the issuance of new shares, saying there were issues with the purpose of the paid-in capital increase. However, on the 24th of last month, the court rejected it and sided with Korea Zinc.
Afterward, MBK and Young Poong argued that Korea Zinc's paid-in capital increase might have violated the issue price restriction under the Financial Investment Services and Capital Markets Act due to fluctuations in the won/dollar exchange rate, and that because registration of the capital increase had not yet been completed, the court registry might have issued a correction order.
At the time, Korea Zinc said, "The board of directors fixed the new share issue price in U.S. dollars and finalized the number of new shares, and the total issue amount was also fixed in U.S. dollars at the time of the board resolution," adding, "The discount rate does not change afterward due to exchange rate fluctuations after the board resolution."
With confirmation that Korea Zinc completed the registration of the capital increase that day, the 10% stake in Crucible JV will be able to exercise voting rights at Korea Zinc's shareholders meeting in March. If 10% Korea Zinc equity is transferred to the JV, Chair Choi's side is estimated to see its voting-rights-based equity, including friendly shares, rise to as much as 45.5%, surpassing the shares held by MBK and Young Poong.
The plan by MBK and Young Poong to add more directors to the Korea Zinc board may encounter setbacks. The Korea Zinc board consists of 11 directors on Chair Choi's side and 4 on the MBK and Young Poong side. As the terms of some directors on Chair Choi's side expire, there was a high likelihood that during the process of appointing new directors at the shareholders meeting in March, the board composition would be reshuffled to around 9–6 or 8–7.
With changes in the equity landscape due to the successful paid-in capital increase, the gap in the number of directors is unlikely to narrow as much as MBK and Young Poong had hoped. A Korea Zinc official said, "With the registration of the paid-in capital increase completed, we have also finished applying for the listing of the new shares," adding, "The new shares are scheduled to be listed on the 9th."